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A Look at the Growth and Impact of Black-Owned Businesses in the U.S.

CEO Tinh Phung
The owner of Marcus Book Store, the oldest Black-owned bookstore in the U.S., talks with her employee about a shop display in Oakland, California, in December 2021. (Amy Osborne/The Washington Post via Getty Images) More...

The owner of Marcus Book Store, the oldest Black-owned bookstore in the U.S., talks with her employee about a shop display in Oakland, California, in December 2021.

The owner of Marcus Book Store, the oldest Black-owned bookstore in the U.S., talks with her employee about a shop display in Oakland, California, in December 2021. (Amy Osborne/The Washington Post via Getty Images)

More than one-in-five Black adults in the United States believe that owning a business is essential to achieving financial success, according to a September 2023 survey conducted by the Pew Research Center. While the number of Black-owned businesses has seen significant growth in recent years, they still represent a relatively small share of overall firms and revenue in the country, based on our analysis of federal data.

In 2021, there were 161,031 U.S. firms with majority Black or African American ownership, a notable increase from 124,004 in 2017, as reported by the U.S. Census Bureau and the National Science Foundation. The gross revenue of Black-owned firms experienced a remarkable surge of 43% during this period, growing from an estimated $127.9 billion in 2017 to $183.3 billion in 2021.

Despite this progress, majority Black-owned businesses accounted for only around 3% of all U.S. firms classified by the race and ethnicity of their owners in 2021. In terms of revenue, they contributed just 1% to the total from all classifiable companies that year. By comparison, Black Americans constituted approximately 14% of the total population in 2021.

As has been the case historically, White majority-owned businesses comprised the largest share of classifiable firms (85%) and revenue (93%) in 2021. Around 11% of classifiable firms were majority-owned by Asian Americans, while no more than 7% had majority ownership from individuals belonging to other racial and ethnic groups.

How Many Workers Do Black-Owned Businesses Employ?

Black or African American majority-owned firms provided employment opportunities for approximately 1.4 million workers in 2021, with their annual payrolls estimated at $53.6 billion.

However, it is important to note that most Black-owned firms tend to be smaller businesses. In 2021, two-thirds of these firms had fewer than 10 employees, while 13% had 10 to 49 employees. Only 3% had 50 or more employees, and an additional 16% reported having no employees. These employment size figures are based on the number of paid workers during the March 12 pay period.

What's the Most Common Sector for Black-Owned Businesses?

By far, the most common sector for Black-owned businesses is healthcare and social assistance, which accounted for approximately 28% of the total in 2021. This means that out of the roughly 161,000 U.S. companies with majority Black or African American ownership, around 45,000 were part of the healthcare and social assistance sector.

Other notable sectors included professional, scientific, and technical services (14%); administrative and support and waste management and remediation services (8%); transportation and warehousing (8%); retail trade (6%); and construction (6%).

A chart showing that health care and social assistance is the most common sector among Black-or African American-owned businesses.

Where Are Black-Owned Businesses Located?

A map showing that Black- or African American-owned businesses made up the greatest share of firms in District of Columbia, Georgia, and Maryland in 2021.

The majority of Black or African American majority-owned businesses (87%) are located in urban areas, while only 5% are in rural areas, defined by the Census Bureau as places with fewer than 2,500 inhabitants.

The states with the highest number of Black majority-owned businesses are Florida (18,502), California (15,014), and Georgia (14,394). District of Columbia had the greatest share of all classifiable firms (15%), followed by Georgia and Maryland (8% each).

Who Are Black Business Owners?

  • They're more likely to be men than women. In 2021, 53% of Black-owned firms had men as the majority owners, while 39% had women as the majority owners. Another 8% had equal male-female ownership. However, when considering all classifiable U.S. firms, the gender gap is even larger, with 63% majority-owned by men, 22% by women, and 14% having equal male-female ownership.

  • They tend to be middle-aged. Approximately 49% of Black or African American business owners who reported their age group in 2021 were between the ages of 35 and 54. Another 28% were aged 55 to 64, while only 7% were younger than 35.

  • A majority have a college degree. Among owners who reported their highest level of education completed, 27% held a bachelor's degree, and 34% had a graduate or professional degree in 2021.

What Motivates Black Entrepreneurs?

When asked about the reasons for starting their businesses, about 90% of Black or African American majority owners highlighted three key factors: the opportunity for greater income, the desire to be their own boss, and the need for the best avenue to showcase their ideas, goods, and services. Balancing work and family life (88%) and having flexible hours (85%) were also commonly cited motivations.

For most Black or African American business owners, their business serves as their primary source of income. In 2021, 70% of those who reported income information confirmed this.

Note: This article is an updated version of a post originally published on Feb. 21, 2023.

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